Morgan Stanley Coffee Report - January 26'18

KC capitalized on yesterday’s rally to close the day at a 10 day high of 125.50  with a gain of 115 points. The dollar extended its decline, after the ECB kept interest rates unchanged, and Mario Draghi expressed little concern about the euro’s gains, as it traded to its firmest level against the dollar (1.2537$/eu) since December 2014.  Market sentiment started off on a positive note and was especially encouraged by strength in the BRL, following yesterday afternoons unanimously upheld conviction of former president Lula…who proceeded to announce that he has accepted his party’s nomination for a return to the presidency, as further appeals are expected.   A 20 point gap higher on the opening was followed by 1000 lots of March trading which boosted prices from 12310-12445 at 4:19 a.m. KC proceeded to rally to 125.50 and origin took advantage to place hedges as the market traded to a 10 session high.  A reversal to the downside at 10:51 time saw 1100 lots of March trade from 12305 to the day’s low of 12170, which was curious, as the high of the sell-off was 5 points lower than the high of the aforementioned 4:19 am buying.  Stops in both directions, or perhaps coincidence, however prices quickly rebounded to yesterday’s high of 12310 a level which proved to be today’s fulcrum.  A 270 point back to back gain is the best since Dec 29-Jan 2nds, 540 point 2 day accretion, and a 10 day high was certainly a welcome respite.